1. Dorota Malgin Legal Adviser Business Innovation and Skills Department, UK Kyiv, 24 February 2016

2.  Principles of operation  State aid for investors  Assessment of success

3. A zone may be established to accelerate economic development in the part of the country, especially by means of:  developing specific fields of business  developing new technical and technological solutions as well as using such solutions in Polish economy  developing export  enlarging competitiveness of goods and services  managing current industrial assets and economic infrastructure  creating new jobs  managing natural resources which were not used so far, maintaining the rules of economic balance. (Article 3 of the Act of 20 October 1994 on Special Economic Zones)

4.  Act of 20 October 1994 on Special Economic Zones with amendments  Regulation of the Council of Ministers of 10 December 2008 regarding state aid to be granted to entrepreneurs operating under a permit for running a business in special economic zones  Regulation of the Council of Ministers of 10 December 2008 regarding detailed criteria to be met by lands to be incorporated into a special economic zone

5.  Regulations of the Council of Ministers of 15 December 2008 regarding the specific special economic zones  Regulations of the Minister of Economy of 2 July 2009 vesting individual SEZs with the right to issue business permits within the special economic zone and to control compliance with the terms of such permits  Regulations of the Minister of Economy of 31 August 2009 defining the development plans for individual SEZs

6. A special economic zone (SEZ) is a separated and uninhabited part of a country’s territory where business activity may be conducted under preferential terms within the framework of state aid provided by the country (for instance, in the form of income tax exemptions).

7.  14 Special Economic Zones  First SEZ established in 1995  Initially the existence of SEZ until 2016 or 2017  Now the existence of SEZ until 31 December 2026  the total area of all the zones must not exceed 25 thousand ha  Specialisation in specific industries

9.  The managing entity: may be exclusively a joint-stock company or a limited liability company in relation to which the State Treasury or provincial authorities have a majority of votes which may be given during a general meeting of shareholders or a meeting of co-partners as well as it is entitled to employ and dismiss majority of members of its management board.

10.  Members of a supervisory board of a company acting as the managing entity, in relation to which the State Treasury has a majority of votes - no more than five persons, including: - one representative of: the minister proper for economic affairs, Chairman of the Office for Competition and Consumer Protection as well as of the Head of the province – as representatives of the State Treasury - no more than two representatives of the units of the local authorities who have biggest share in the initial capital of such a company.

11.  Members of a supervisory board of a company acting as the managing entity, in relation to which the provincial authorities have a majority of votes  no more than five persons, including:  two representatives of the provincial authorities;  a representative of the minister proper for economic affairs;  no more than two representatives of the units of the local authorities, excluding the provincial authorities who have biggest share in the initial capital of such a company.

12. Incentives for investors have to be in compliance with the state aid rules

13.  Incompatible with state aid rules (before Accession Negotiation) Tax exemptions: - unlimited state aid amount - state aid not linked with investments - sensitive sectors  Compatible with state aid rules (after Accession Negotiation)

14. - investment costs in SEZ – minimum 100.000 EUR - the contribution of entrepreneur’s own funds (at least 25% of the total eligible investment costs) - Obligation to maintain new investment/jobs in the region (for the period of at least 5 years and in case of SMEs at least 3 years) - keeping the ownership of the assets to which investment expenditure was related – for the period of 5 years (SMEs 3 years)

15.  Income tax exemption - the exemption refers to income which is generated from business activity run within the territory of a SEZ on the basis of a permit – established by the Law  Real estate tax exemption – established by a municipal council in the form of a resolution

16.  for large enterprises – from 15% to 50% of eligible costs  for mid-sized enterprises – from 25% to 60% of eligible costs  for small enterprises – from 35% to 70% of eligible costs

18.  The costs related to the investment in SEZ fall into two categories:  costs of a new investment  costs related to creation of new jobs

19.  Legal basis for granting state aid in SEZ  for selection of entrepreneurs - tender or negotiations organized on the basis of a public announcement (Art. 17 of the Act of 20 October 1994 on Special Economic Zones)

20.  specifies the entrepreneur’s main commitments, in particular: the number of new jobs to be created by the investor within the new investment the amount of eligible expenditures to be incurred by the investor within the new investment the investment completion date the maximum amount of eligible expenditures and two-year labour costs (Article 16 of the Act of 20 October 1994 on Special Economic Zones)

21.  the second extension of SEZ period of operation  Positive assessment by investors  Information on the implementation of the Law on SEZ  Advantages: - the quality of infrastructure - transport network - the availability of a well-educated workforce - the zones’ advantageous geographic locations - favourable attitudes and active support from central and local government bodies

25.  No uniform model  No uniform legal basis  In some cases established in co-operation with SEZ  Various state aid forms

26.  Introduce incentives for investors in compliance with the state aid rules  Establish the system of state aid monitoring  Use other countries’s experience

27. Thank you for your attention!